COMPANY Case Activia in Egypt

DANONE AROUND THE WORLD Groupe Danone is a French company established in 1925. Initially, the company produced dairy products; it then gradually introduced several new brands in different product categories. It sells about six million cups of yogurt a day in almost 100 flavors, styles. and sizes. Activia is the company‘s top-selling brand of yogurt worldwide. Dannon® is the name of the US subsidiary company and is associated with one of its brands over there. It is sold under the names Dannon or Danone, depending on the country it is sold in. its official name in Egypt is Danone. The company prides itself on consistently delivering high-quality, wholesome products and re5ponding to consumers' needs with nutritious, innovative new products and flavors. DANONE EGYPT Danone was introduced in Egypt during 2005, after its acquisi- tion of Olait along with its headquarters and factories. it first launched Danone core (the regular yogurt) in 1109 and 809 plain, Danone sugar yogurt, DanOne lite. Danone fruits with various flavors (berry, strawberry, pineapple, and apricot), and Danone Mixy for children. In June 2008, the company intro- duced Activia. ACTIVIA ENTERS THE MARKET Danone launched Activia for the first time in 1986 in Spain and it soon became available all over Europe. A group of researchers dis- covered the importance of bacteria in the digestion process and went on to develop a technique with which they could culture the 'good' bacteria and insert it into the yogurt. The bacterium Actiregularis was Custom-made for Danone. Activia is now prevalent in 68 countries around the globe. it is one of the fastest-growing products inno- vated by Danone. Its sales are estimated at US$14 billion annually. Activia was introduced to the Egyptian market in June 2008, then with just one product: plain 110g. The probiotics market in Egypt was still at the introduction stage, and Danone aimed to grow the market. On July 16, 2009, Danone Egypt introduced two flavors of Activia yogurt, vanilla, and honey. THE PROBIOTICS MARKET lN EGYPT BEFORE ACT IVIA Before Activia's launch, probiotics comprised just 0.2 percent of the total yogurt market in Egypt. There were two key players in the market: Nestle, which introduced Nesvita as a pro-digestion fat-free powdered milk with Actifibras; and Juhayna, which intro- duced Juhayna Digestive, the oldest player in the yogurt market. Lactel then introduced Lactel B Active after Activia's launch. ACT IVIA’S PERFORMANCE By June 2009, a year after the introduction of Activia. the probiotics market had witnessed fast growth, increasing from 0.2 percent to 5.7 percent, of which Activia captured more than 76 percent (4.3 percent of the total yogurt market). Activia main- tained its leadership in the probiotics market, reaching 84 percent in early 2010 (5.7 percent out of 6.8 percent of the total yogurt market). Also, consumer research revealed the taste of Activia to be the best liked among all the yogurt brands in Egypt (including other Danone brands). CHALLENGES IN THE MARKET It was not easy for Danone to grow and lead the probiotics market in Egypt because of the low awareness of probiotic yogurts in general. But Danone nevertheless considered probiotic yogurt a good business opportunity and began working to tackle those challenges. Da none attempted to raise awareness of the vitality of probiotic yogurt, to show how they positively affect the digestive system and help those who have digestion problems. To achieve these goals, Danone developed advertising campaigns and PR activi- ties, including a 360° Campaign.’ whereby the company used all available communication tools to reach its target market. Chapter 9 Accordingly, Danone designed television, radio, and print ads; held press conferences; issued press releases; printed point of purchase materials, flyers, and brochures; and organized sampling in supermarkets, universities, and hypermarkets. All these communication tools carried a consistent message to the consumer stressing that the product is 100 percent natural and guarantees to improve the digestion process. The campaign was successful and very quickly Danone increased awareness of the Activia brand in the Egyptian market and consumers began to View the product as credible and relevant to them. To tackle the issue of credibility, Danone continually relayed a message that Activia is 100 percent natural and roves digestion. Danone repeated its message consistently ough different advertising campaigns and PR activities. It lished articles in leading women's magazines by well—known icians discussing the effectiveness of Activia yogurt to ove digestion. It also contacted physicians and explained to the benefits of Activia. Many weiI-known physicians were 'nced and decided to advise their patients to eat Activia Early. Such support for the product increased the credibility of Activia and probiotics yogurts in Egypt. Also, Activia bed a campaign called the ” Activia Challenge, ” which aimed _ further raise Activia's credibility and encourage immediate use. The company's challenge to consumers was this: eat ' 'a regularly for 15 days and it will help improve digestion. if the improvement is felt, you will get your money back. This cam- New—Product Development and Product Life-Cycle Strategies 265 paign were very effective in increasing the product's credibility as well as encouraging consumers to try the product. However, its impact on consumers' trust and belief is yet to be proven. In November 2008, the company faced a different challenge— an increase in the prices of raw materials and packaging. The com- pany decided to increase the price of Activia by about 17 percent. Several promotions were launched to reduce the effect of the price increase on sales. Moreover, the introduction of additional flavors assisted in increasing Activia‘s sales in the market. Because Activia has raised awareness and increased the size of the probiotics market in less than two years. Activia's example is considered one of the success stories new-product introduction. Smart consumer-centered strategies allowed Activia to become a leader in the Egyptian market very quickiy. Questions for Discussion 1. Evaluate the timing at which Activia entered the market. 2. In which stage of the product life cycle is Activia? Based on that stage, is Danone employing good marketing strategies? 3. Propose a strategy for Activia's next product life-cycle phase. 1L Discuss the potential threats to Activia‘s future success. What will help Danone avoid a premature decline for Activia? Source: Based on the author's interview with Mohammad Ali, Brand Manager at Danone. …

– Conduct PESTEL analysis

– Discuss strategy/strategies Danon adopted

– As a marketing consultant, advice Danon to gain a competitive position